Latham v. Moore, 59 N.C. 167, 6 Jones Eq. 167 (1860)

Dec. 1860 · Supreme Court of North Carolina

59 N.C. 167, 6 Jones Eq. 167

SIMON J. LATHAM AND OTHERS against GILBERT L. MOORE AND JOHN J. SHERROD.

Where one takes a note of the estate from an administrator, mala fide, as for instance, in payment of the administrator’s own debt, he cannot hold the fund from the next of kin, or those who are entitled to be substituted in their place, unless the administrator was in advance for the estate.

Cause removed from the Court of Equity of Martin county.

The defendant, Gilbert L. Moore, as the administrator of one Daniel Ward, sold lands belonging to the estate, to one E. W. Cox, who gave his note for the purchase-money, amounting to $2,500, dated the 8th of October, 1857. During the life-time of Daniel Ward, the intestate of defendant, Moore, the defendant, Sherrod, held his notes to the amount of $1,300, and Gilbert L. Moore was also indebted to him, Sherrod, in the sum of $700, and at the request of Moore, who had qualified as the administrator of Ward, Sherrod assigned to him the said notes against the intestate, and, in consideration of such assignment, and of his own indebtedness, Moore gave his bond, payable to Sherrod, for two thousand dollars, with Eriley W. Moore as surety, dated the 1st of January, 1855, and bearing interest from date. Afterwards, at the request of Moore, Sherrod took from him the note on E. W. Cox, which, with interest accrued, amounted to $2,534.58, and, in payment therefor, gave him $200 in cash, a note on Colin E. Spruill for $859.20, and gave credit on the- $2000 note of Gilbert Moore and Friley W. Moore, for the residue of the $2,534.58, viz. $1,475.

Ward, in his life-time, was guardian of the minor children of one Powell, and a judgment for the sum of $1380.48 was recovered against Gilbert Moore, as administrator of said Ward, and also, against the sureties on his, Ward’s guardian bond, at April Term, 1857, of Martin county court, for money due the minor children. The bill is filed by the sureties upon Ward’s guardian bond, and the sureties upon the administra-^ tion bond of the defendant, Gilbert L. Moore, and alleges, that he, Moore, has wasted the assets of the intestate’s estate. to a large amount, and is now insolvent, having made an assignment of all his property for the benefit of certain of his creditors; that creditors of the estate have obtained judgments against the administrator to a large amount, and have sued out writs of scire facias to get judgment against him individually ; and, that as a consequence, the sureties upon his administration bond will have to pay the debts, to the amount of the assets so wasted.

The prayer of the bill is, to have a receiver appointed to take into possession all the estate of Daniel Ward, that can be found, and apply the proceeds, under the direction of the Court, to the payment of debts, and that the defendant, John J. Sherrod, be ordered to surrender the note on E. W. Cox, to be applied as part of the assets of the estate; also, for an injunction to restrain him from parting with the possession of it.

Frilej7 W. Moore, mentioned above, as the surety on the bond for $2,000, given by the defendant, Gilbert L. Moore, to the defendant, Sherrod, is also one of the sureties on the administration bond of Gilbert L. Moore, and is one of the plaintiffs to this bill. Defendant, Sherrod, filed a cross bill against him, setting out the above recited facts, and also, that Friley W. Moore, as surety, had paid him the balance due on the $2,000 note, a judgment having been obtained for the same in the county court, and it claims that Sherrod, the plaintiff in this bill, is entitled to have the balance on the $2,000 note, which will remain unpaid if the credit was erroneous, set off against any sum to which the said Friley W. Moore may, by the decree of the Court, otherwise become entitled by reason of the purchase of the said note, and also, that Fri-ley and Gilbert Moore ought to pay the plaintiff, Sherrod, the full amount of what he may be compelled to refund on account of the credit of $1,475.32 on the $2,000 note alleged in the original bill to have been erroneously given.

Sherrod admits in his answer to the original bill, and also in his cross bill, that he was aware when he purchased the note in question, that it was a part of Ward’s estate, but alleges that Gilbert L. Moore was in advance of for advancements made for the benefit of the estate, and had, therefore, a right to reimburse himself out of the funds of the estate. In order to ascertain the truth of this allegation, an account was ordered to be taken, from which it appeared that the administrator, Gilbert L. Moore, was in advance to the full amount of the credit of $1,475.32 on the $2,000 note of Gilbert and Eriley Moore, less $113.06.

Upon the filing of the cross bill and answer, the cause was set for hearing upon bills, answers, exhibits and proofs, and transferred to this Court by consent.

Winston, Jr., for the plaintiff.

Rodman, for the defendant.

Peaksox, C. J.

An administrator has a right to sell or discount a note belonging to the estate, for the legal title is in him, and the exigency of the estate may make the conversion expedient. But, when one takes a note of the estate from an administrator, mala fide, as for instance in payment of his own debt, so as to be a guilty participator in the abuse of power, he cannot hold the fund from the next of kin, or those who are entitled to be substituted in their stead, unless the administrator could have resisted their claim, on the ground that he was in advance for the estate, and consequently did not abuse his power, but had a right to apply the note to his own purposes by way of reimbursement; Wilson v. Roster, 7 Ired. Eq. 231, where the subject isfully discussed, and the cases cited-.

In respect to the cash payment, $200, and the payment by means of Spruill’s note $859, the transaction does not come within the prohibition of the rule above stated. But, in respect to the sum of $1,475, which was entered as a credit on the note of the administrator, the prohibition does apply, unless the administrator was in advance for the estate, and for that reason had the right to use the funds of the estate for his reimbursement. In order to ascertain how this matter stood, an account was taken, by which it appears the administrator was in advance to the full amount of the credit, less the sum of $113.06. So, the appropriation was rightful except as to that amount, as to which the plaintiffs are entitled to a decree for a rateable part except Eriley Moore, ■whose claim is affected by an equity of the defendant, Sherrod, which is set up by the cross bill.

Among the vouchers of the administrator, are “ accounts paid,” to the amount of $681.15, and it seems there are notes due by the intestate still unpaid to the amount of $1,576.52, and the question was suggested, whether, under these circumstances, he was entitled to claim the amount of the “accounts paid” as so much advanced for the estate. We can see no sufficient reason why, he is not so entitled. The accounts paid are admitted to have been just debts due by the intestate. How far he has made himself liable to the note creditors by not giving to them the preference to which they are entitled in a due course of administration, over simple contract creditors, is not now the question ; but simply, was he in advance for the estate, by having paid off debts of the estate? If so, he was entitled to reimburse himself by mating an appropriation of the note in controversy ; at all events, that fact is sufficient to repel the equity of the next of kin, or the plaintiffs who claim to be substituted in their stead, to follow the fund in the hands of the defendant, Sherrod.

The cross bill was brought to a hearing with the original bill, and relieves the Court from any embarrassment, as to the manner in which the decree should be modeled, so as to mete out justice to all of the parties. Eriley Moore was the surety of the administrator to the note on which the defendant, Sherrod, entered the credit. So, he has had the full benefit of it, and so far from having an equity to hold the defendant, Sherrod, responsible, the latter has a plain equity against him to recover so much of the $113.06, as is recovered of him by the other plaintiffs in the original case, for in effect, he will have paid that amount on a note to which the said Friley Moore was surety, which being in his exoneration, falls under the well settled doctrine of subrogation.

Per Curiam, Decree accordingly.